Murali Akella of TransferWise: Not a Job, But a Revolution
In this episode, we are joined by Murali Akella, who has helped TransferWise partner with banks across the globe.
TransferWise has been a revolutionary form of transferring money overseas at the lowest possible cost. Started in 2011 in the UK, it quickly became popular and now has over 6 million people who use their service.
Unsurprisingly, to get to this stage they needed to expand. They opened up offices across the globe, including America.
Murali shares with us what this experience has been like, why it was necessary, and the differences in the American market compared to the United Kingdom.
“This job is not a job, it’s a revolution.”
Time Stamps:
00:17 - How TransferWise started.
02:34 - The bank accounts that TransferWise offers.
05:23 - The number of clients TransferWise have and who they are.
06:32 - How banks use TransferWise and how it works.
09:43 - How sending money overseas actually works.
12:11 - What the average fee is for sending money overseas.
13:06 - The different exchange rates you’ll get using banks or TransferWise.
15:41 - The benefits of TransferWise.
18:33 - How TransferWise has expanded and where their offices are now.
20:46 - The reasons for expanding to America and the surprising underdevelopment there.
22:35 - What motivations American banks have for using TransferWise.
25:18 - The high demand for easy money transfers in America.
26:49 - How the American market is different from the UK's.
30:33 - Where in America TransferWise has offices and why Tampa was an attractive city.
33:15 - The get togethers TransferWise have for its global force, and how culture can exceed borders.
35:35 - How to operate within different regulations across different countries.
37:51 - How running offices in the US is surprisingly similar to running offices elsewhere.
39:53 - Different expectations American clients have compared to European clients.
41:06 - Advice for those considering a move to the US market.
42:42 - TransferWise’s aim to keep their service homogenous for all their customers around the world.
44:33 - What the biggest challenge is when expanding to the US.
Send us questions you want answered to info@mtbonnell.com
Resources and Mentions:
Transferwise
Swift
Slack
Hangouts
Zoom
www.mtbonnell.com
Connect with Murali Akella: LinkedIn
Connect with Nastaran Tavakoli-Far: LinkedIn
Connect with Sebastian Sauerborn: Linkedin
Episode Transcript
My name is Murali Akella, I go by Murali, and a myriad other nicknames in the London office, but I’m part of this team called TransferWise for Banks, my team and I, we’re specializing in taking TransferWise’s infrastructure and putting it right inside of bank
Nas: TransferWise are the money transfer service founded by the guys behind Skype, and that’s Murali Akella, who’s lead that expansion into the US.
You’re listening to Move Your Business to the United States, from Mount Bonnell Advisors, the consultants who help you expand your business to America. I’m Nas or Nastaran Tavakoli-Far in full and we’re speaking to companies who’ve made the move to find out their dos and don’ts and any tips they have for your journey. For this week’s episode Mount Bonnell CEO Sebastian Sauerborn and I went to the heart of London’s tech scene in Shoreditch to speak to TransferWise.
Now TransferWiise is a very popular money transfer service. I know Sebastian uses it a lot and it lets you transfer money from one currency to another really quickly and often with much lower fees than most banks. It was set up in 2011 by the founders of Skype, they were being charged big fees when trying to transfer money between themselves across countries.
So they tried to solve this problem the way any good entrepreneur does, which is by starting a company. Murali Akella is the head of TransferWise for Banks, and he’s led the US expansion. We’ve talked to him to find out more. Also every episode Sebastian would be answering your questions about expanding to the US, so send them over to info@mtbonnell.com you can find that in the show notes. Okay, here we go.
Murali: So TransferWise started off in 2011 with two friends, Estonians, effectively, but one of them was working in London and one in Tallinn. So they had different income streams, one was earning in Sterling and the other in Euros. It turns out they had mortgages to pay, and sort of bills to pay on the other side.
So the guy earning in Sterling had to pay in Euros, and the guy earning in Euros, had to pay on Sterling, now that was a problem that was easily solved at first, they just got together and said, “hey, why don’t you, you know, the guy that was earning in Euros, why don’t you pay my Euro bills, the guy was earning in Pounds, you pay my Pounds bills, and we’ll settle it between us”.
They asked each other what would the fares, settlement rate be between us, like what the fare would be, would apply, the most natural thing ever, like, you Google for it, whatever you find you would settle at it. It turned that they stumbled upon the most efficient way of actually doing effective money transfers.
Until then the only way you could do was with a bank and they each had to pay 50-60 quid away every month, just to get these funds moving but when they bypassed the whole banking infrastructure, they could do it in a much more cost efficient and fair way.
Fast forward eight and a half years, we’ve sort of taken this to more than six million customers around the world, we move roughly around four million sterling a month, which is more than fifteen billion dollars a year, so we know a thing or two about money transfers across borders.
We’ve been able to send money to about fifty currencies and about seventy countries to date, and again, we’ve also matured in terms of, not just being a friend to friend sending model, but we’ve developed the large network of bank partners, developed a robust fraud management system, a treasury management system, and everything else that’s required to run a proper money transferring experience for our costumers.
Sebastian: And now, I mean, for also quite a while you offering bank accounts, in that sense, at least for customers in the European Union, I’m not sure it’s internationally.
Murali: Actually we do offer a multi-currency accounts to a whole lot of customers, not just within the EU, there are some nationalities to whom we cannot offer because of the local jurisdictional rules, effective regulations that don’t allow for these individuals to have it, for example I’m Indian, if I’m resident in India, then I would not be provided with a borderless account but if I’m resident elsewhere, then yes.
Again, there are myriad other rules, that govern whether or not you can have borderless account, but millions of people around the world today can access that particular product feature. There is the ability to manage your money in about forty two odd currencies, so you can add money in one currency and you can move it in any other forty plus currencies and manage it at a time and rate of your convenience.
Sebastian: And I think we should emphasize that those bank accounts or borderless accounts from TransferWise are really useful because we have a lot of clients who find it difficult, you know, let’s say we have a German person who owns an company in the United Kingdom, they find it really difficult to open account in the UK, they might have go there and the bank says, well, you don’t reside in the UK so we’re not gonna give you a bank account.
So, TransferWise really makes it really busy to open, especially in the business space to open international business accounts and, I mean, we have a lot of clients who use TransferWise and it’s pretty much, or the few ways, you know, we’ll not mention any competitors, to open an account, if you are based in a different country.
Murali: Yes, I mean, to be honest it’s not just a use case that is marketed as business, sure it is easy to see how business with a multinational presence are able to use it functionality to send and receive money much better, much easier and for much cheaper.
We’ve also equally extend to people who have borderless lives, I mean, people who travel, people who actually do live in two or three countries who travel quite differently, this is a very, very repeatable use case for them.
And again, it’s about the small delights that we are able to bring to our customers, right, so when we launched the card offering for instance, we’ve started to find a way in which we say, look you’ve got pounds in your account, okay, and now you’re out to also add euros, so now you have two balances, pounds and euros.
You go to India, you spend somewhere and you have an option either debit or Euro, or you Pound account, and you’re going to choose actually the lowest cost for the customer. So we’re actually not saying, well I mean, it’s up to the system, we don’t know what rate you charge, but we are doing it with the TransferWise way which is to say, we’ll charge as less as possible, or the best possible experience you can get.
Nas: And Murali, what’s the breakdown of your clients?
Murali: Well, I mean, we have, as I mentioned this before, roughly about six millions clients around the world, and we are increasingly seeing tons and tons business customers, so smaller medium business we are adding ten thousands of those on a monthly basis, we also have sort of expanded on the banks that we were working with, so you would’ve seen that from last year, where we were live with in Europe we had in 26 mBank and Monzo and if you count the UK still being in European Union [smiling] extended area.
Nas: We have.
Murali: [smiling] In the US we have just announced a partnership with Stanford Federal Credit Union and with Novel and we’ve announced partnership as well with UP in Australia, in addition with announcement of partnership with BBC in France, so, this is an area of strategic focus for us, and we’ll be seeing a whole lot more over the next few months and years.
Nas: And so how does it work when you work with banks?
Murali: We partner with banks and effectively take our infrastructure and make it available for use for them. And essentially, banks, customers therefore have the ability to not just see their money, borrow their money, invest their money but they are now also have the ability to send money abroad, using Trasnferwise but from within their bank application and website.
It’s like, you login into your Lloyds account and say, hey, apart from the five or six things that you can do, you see a little button that says, click here if you want to send money abroad, and this flow is now being part by TransferWise.
Of course, we’re not live at Lloyds, yet, I think [smiling] but the idea is that, any bank or any financial institutions, we offer a set of API which take and consume and offer our services to their customers.
Nas: So this is interesting cause what you do could be seen as a competition to banks, but did they initially approached you, did you think, we should go to some of these banks and offer what we do?
Murali: I think, to be honest, it was a bit of both, we obviously not thought that this was a good idea, when we have built in a whole lot of world class infrastructure and system’s capabilities, why keep it to ourselves, it’s the spirit of openness that’s states that we should be making this available to anybody who wants to use it.
The second way is, banks increasingly find out that their existing systems, the way they are using corresponding banking, it’s just not efficient for them. Their customers are beginning to wake up and ask for more.
They are used to TransferWise, and said you won’t mention competitors, but I’m happy to state that there are so many non-bank players right, Western Union, PayPal, Revolute, Xoom, you name it, there so many players out there that people now have awareness of a better sending experience.
And they’re now asking their banks, why can’t I just have it from within the bank why is it that you guys have to charge it more, so there is equal and clear interest from banks to state, can we find better infrastructure? And when they start asking these questions there are these obvious questions, right, should we build it ourselves or should we just go partner, and when they think about building themselves, well we do have an interesting parallel to offer, it would take you about 689 million dollar in investment and about eight and a half years of work [smiling] which is roughly the effort that we took.
Now would you want to do that, completely up to you, alternatively, would you want to partner with us where the infrastructure we offer is for a lack of better word, open and free. So, it’s, you know, making this as much of a barrier less entry to using as possible.
Nas: And, so, Murali, just for the people listening, say, so I’m here in the UK I have a bank account, say I want to send 300 pounds to someone in the US, how would it work with traditional bank versus using TransferWise?
Murali: Yeah, sure, I mean, we can talk about it from two angles, right, how you would sort of experience it, and how the bank would actually see it from the background, probably with more technical, we do it with Monzo bank in the UK, so that’s an interesting example we can take, you login into Monzo and say you want to send money to your friend in the US, Monzo says sure, here is the workflow that TransferWise provides, which is roughly the same as ours, right, so, tell us who you’re sending money to, how much you want to send, and after you review, just click “Yes”, takes no more than 15 to 16 seconds and you’re done.
In the background what happens is, we create a settlement of funds between Monzo and us, such that we take the Sterling from your account, after our fees are debited, we convert the amount at the mid-market, the most fairest rate possible, they can’t beat a better rate, because that’s the rate in the market at that moment and then we would then compute the amount of dollars that your recipient in the US would need to receive.
Nas: So it is right the amount of money that I’m sending at?
Murali: After we take the fees out, so let’s take an example, let’s suppose you send, round number let me take 1000, so our fees have to be in the range of 4 or 5 quid, I think I need to precisely compute it, but let’s assume it’s 5, so that’s 995 pounds that are need to be converted. Now, if the rate of GVP and the US is like, 1.25 and again, I’m making as an assumption, then the total amount that your friend in the US will receive is 995 multiplied by 1.25 that amount we won’t actually send across borders, we’ll take it out from our existing liquidity amount, in our account in the US, we’ll take that money out and send via the local, sort of payment rails if you will to your recipient, and that’s how we are able to make that much, much faster, and much, much cheaper as well, because we are sidestepping the usual typical infrastructure, that the bank uses.
It’s as you all would know, it’s swift, it’s got corresponding banks, there is waiting, there is fees and all of those, sort of slippages and blockages and leakages of fees, which we don’t have.
Nas: So just for the people to understand it, what would be the process and the sort of average fee that I would doing this traditionally?
Murali: Traditionally, I mean it depends on each bank so we can’t fully generalize but I think roughly, in claims of the industry, that you would pay on average 5 to 6% if not more, depends on the currency you’re sending to, depends on the amount, depends on which particular time of the day, so one and so forth, there are many factors that are done in pracing, and some are far too complex to even understand, which is why they came up with random fees, like, we don’t care, just pay it 35 dollars, and we then ask them, why 35 why not 32, and they go, that’s because it’s policy, don’t ask questions [smiling] so but typically it’s in the range of number, 67% whereas ours is more in the range of 1.7 to about 1% again, depends significantly on currency amount being sent and so on.
Nas: And also, what about the exchange rates that traditional bank would use, versus you guys?
Murali: So, exchange rates are always funky [smiling] in the sense that, what you see on Google or what you see on the market is not necessarily what is applied on your rate, and that is one of the educational parts of our product rate, we want to help our customers ask the question, what is in that rate, are you charging spreads, which is like, there is the rate and there is the price that is applied on your transaction and there is a big difference.
That is the spread, that spread for TransferWise is zero, now, those spreads for bank are variable, they depend.
And there is no great answer to say, will you apply the same spread if I send the same amount of money tomorrow, right, and then there is, again, apart from the fees that you charge upfront, which is, you know, okay, you want to send your money to your friend in the US, then you would say the upfront fees are $30 and the spreads are roughly around 1% so what you’re paying is around 35 plus about 2%, 3%,4% whatever the rate is, that is applied as a marked up to the exchange rate. Those are the hidden fees that your customers don’t know about.
Sebastian: And it’s a lot worse in the US, the fees are a lot higher in the US than they are here.
Murali: Certainly there are range of providers in the US, again, it depends on the bank, depends on their specific infrastructure, but yes, we can certainly say that the problem is also prevalent in the US, like, people still spend anywhere between 3 to 8 percent, sort of is exacerbated when you send it as liquid currencies, they pay a lot of money for the act of moving money abroad, just to quote one of our founders, of money movement is series of bits and bytes and flows over electronic network, if you don’t pay anybody to send an email, then why you need to pay someone to send you money, right, so if you take that as a basis, getting charge 8% is an absolute-
Sebastian: A good example is, not even banks, a good example is, the company management for PayPal is incredibly expensive.
Murali: PayPal actually, adds a lot of value to a lot of people, and their pricing model is significantly sort of different to how we would price. People see value in PayPal, still, and they are willing to pay the fees that they charge, but then suffice to say that there are alternatives to PayPal these days, and in specific use cases we certainly are one of them.
Sebastian: Yeah, definitely, I think TransferWise is a combination of benefits, right, I mean, speed is one, ease of use is one, low cost is another one, it’s based three very significant benefits.
Murali: Yeah, indeed, I think most of, if you think of as heavily technology driven, which we are, we define product fillers for ourselves, so, the three as you very rightly pointed out, are price, speed and convenience, so, with everything that we do the first question we ask is, if invest in a product time, if we are investing in developer time, are we making customers price cheaper, are we making the speed of their transfers faster, are we making their lives easier, when they navigate through our workflow.
And, if it doesn’t, then, you know, it immediately gets set to a second pile which is to say, not we look at this later but primarily, you know, ruthless focus is on this product pillars. So we’ve seen significant improvement, right, so, the initial days when Taavet and Kristo started off, we use to wait two days, couple of days, for a matching order to come. We don’t do that anymore, in fact, about 24 or 25% all of TransferWise transfers are today, are instant, in the sense that it takes less than 20 seconds for cross-boarder.
Nobody else, sort of successfully does that or measures that at that scale, so essentially, what we are saying is, if you are seating in the UK and you were sending money to India, send money now and 10 seconds later, refresh your account balance in India, and you should see the money there.
Sebastian: In the US it takes a day right, the next day, normally, I mean I do quite a few transfers to the US with TransferWise and it takes normally a day, I think.
Murali: Yes, again, I mean, depends on several factors, because the way that we are sending money is the local clearing rate, the ACH rails, if the ACH rails typically take a day to clear, then that time will still be taken for us to send and receive money.
There are ways that we can shorten that, there are other dependencies, like what are the currencies, at what time did you send them, did you send your transfers on a weekend, did you send them on a working day when both UK and US were open and myriad other variables, right, but, again, what we are trying to do is to optimize it for most of our customer base in such a way that we still continue to improve on the price, speed and convenience aspect.
Of all things Americans are, we are makers. With our strength and our minds and spirit, we gather, we form and we fashion, makers and shapers and put it togetherers, we start young, finding out early in life what it’s like to feel something grow and take shape beneath our hands. We start young and we stay young, modeling with careful pride the things we expect to endure for ourselves and for others. We build for use and we build in fun, joining eyes and hands and brains into knowing teams that bring great dreams to life.
Nas: So Murali we’re in this office in the heart of Shoreditch, which is where there’s a lot of startups and a lot of good business activity, you seem to have a huge floor, lots of people working there lots of meeting rooms, can you tell us a little bit about what happens in your operation here maybe and a timeline and just a bit of an expansion to the US so where you are at exactly?
Murali: Yeah, sure, so, we were London’s HQ like forever, so we started off with a smallish office then we had our office in City Road, we are grew that, then we started off here in the T Building on the six floor.
Nas: Do you have the whole floor, it seems like a huge-
Murali: Oh, wait we still have more- [smiling]
Nas: Oh, you do?
Murali: No, I mean, we had where you’re seating now is the second half of the sixth floor, the way we put it, we originally were in the right side sort of portion of it, we had to blow hole in the ground take over the fifth floor and then blew a hole in the wall here and took over the rest of the sixth floor, so yeah, we did have to make a way of a good take of expansion. That’s from-
Nas: Cause I want people listen to gather sense of the scale and everything.
Murali: Yes, the London office currently has, if I’m not wrong, around 250 people, I think that number might be wrong as of yesterday we don’t know [smiling] but we certainly- [smiling]
Nas: Hires or fires?
Murali: [smiling] Well, look, I mean, it depends on what each office does in TransferWise, London particularly is like a full fledge office, so we have like a product people, we have developers, designers, legal compliance people, bankers, you know the whole spectrum of job functions if you will, are based in London.
We also, one of our largest office is in Tallinn, in Estonia, where again we have a large chunk of customer support officers, operations, settlement people, treasury folks who are also based, in addition that the London office has, I think we’re roughly around if I’m not wrong, thirteen offices around the world and still expanding, some of them are smaller, some of them are fully staffed, as Tallinn is, and some of them are hubs.
So for example in Tampa, in Florida and the US that is a hub for US operations and customer support and our product designers and banking people are in the New York office, Singapore is our hub for Asia, and London and Tallinn are sort of joined hubs for Europe.
Nas: So tell us a little bit about the expansion in the US, how does that look for you guys, reasons for it?
Murali: Well I mean, if you will, I would probably talk more in the context of banks, and then you know probably broadly for TransferWise. For TransferWise banks I think you know when we were looking for the best places where we could invest our time and be able to have significant impact, the customers, one of the funny things we’ve noticed about the US is although it is probably the most developed market in the world, in certain pockets it does still feel like, it’s still a large emerging market, you know, there is so much product needs that come out of it, there are pockets of under-served customers, there are banks who say, hey you know we’re running infrastructure from the nineties, could you help us out?
And you know there are these pockets where we thought, if we were to start there, learn how the market operates, start to sort of fulfill the product needs that the customers are looking for, we can then start magnify it for the rest of the continent.
Any sort of, you know, numbers you know geek like myself would tell you that the market itself is huge and gigantic in terms of this ability, but for us to take the first ginger steps to say, can we still do this, is this a market over saturated, is this aid that we will spend a whole lot of time and not get a return of it, those fears are very quickly allied, you know, actually dip down deep in the water, try to find if enough banks will be willing to work with us and boom, with the response that we’ve got, why weren’t we here yesterday?
Sebastian: And what is the motivation with American banks, I mean I think, I’ve lived in the United States for long time, until quite recently and I think a lot of things, the whole infrastructure is very old fashioned, I mean, a lot of check writing still going on, a lot of banks, not the big banks, not the Bank of America, Chase, but the smaller banks you might not be able to make direct transfer into those banks, they are not able to receive an international payments, for example, you have to go through other banks. And so, it’s very complicated.
But the big banks of course are very well developed in the States. So is the motivation, is the realization that’s like hopelessly out of date infrastructure they have to do something and that what TransferWise can offer is just a great offer to facilitate that necessary change in a much quicker fashion than doing by themselves, I guess.
Murali: Absolutely, what you are referring to is, the often used words in conferences which is “digital transformation” [smiling]
Sebastian: [smiling] Exactly
Murali: Whether we use that word or not, it’s essentially it’s stating that you have to re whole yourself for what is to come, right, we think of it in three ways, one is, competition is coming, whether we like it or not, banks themselves are sprouting their own- non-bank players are coming up and guess what, competition is inherently from your customers as well, in the sense that, if you don’t offer this product and another decent bank will, the elasticity to shift is at all time high, all they have to do is uninstall your App and download that one, how much time does that take today, it’s thirty seconds, right, loyalty is shifting, it used to be very rare for the previous generation. This generation for the people who are internet aware and app aware, it doesn’t matter, for much.
And that realization is slowly coming to banks, there are thinking, we are here to serve our customers and we have to keep them using us, and if we can’t keep them then it’s business lost. Business lost is one thing but to regain that business it will take them three times the effort.
So, why don’t we just, you know, have active improvements in partnership for example, where you’re able to take a significant step forward and offer a better product for your customers, give them a better experience. And build the reasons to state back and bank with you.
Sebastian: Cause there is a lot of international transfers going on from the United States, even if you just think about, few user cases like the Latin community, certainly, and literally sending money to Mexico, using like, Western Union, it’s very inconvenient, very expensive, or to Asia, Africa, those places, right, so, I’m sure there is a huge, I’m not even talking about the business community, there must be huge, massive potential customer base there?
Murali: Absolutely, I mean, if you, again, focus at eve further, let’s just take the West Coast as an example. Silicon Valley, right, sure I mean it’s this, one of the big epicenters of the American dream today, but it isn’t just Americans living there it’s people from all around the world coming there to sort of build their dreams and there is still a very active element of people sending money back home for their family maintenance, for funding somebody else, for paying for education, for any number of reasons right?
Our view of the whole thing is, we’ve been able to serve them better, they can live better financial lives if they use TransferWise and therefore we think it make sense for us to get to them faster. It’s not so obvious, you know, everybody on the street needs to know about TransferWise, the minute they walk out the door.
There are ways in which we can reach them, and we think that making it available in a place where they manage their entire financial lives, their banks, is one of our primary places where it should be surfaced to them, they have the option to use it or not.
Nas: So it’s interesting cause you have been mentioned you’ve given the example of the Silicon Valley where people who are from all over the world, working there, earning money, maybe sending back home. Is there anything about this kind of phenomena in the US, the culture or the social setup that has made what you do slightly different in the US compared to doing it here?
Murali: Yes, I mean, in terms of UK, right, if you again contextualize it, banks operate and sort of treat let’s say London area and adjoining areas, slightly different from the rest of the country. Again in the US there is a geo specific difference, I mean people in the West Coast and East Coast are sort of far off slightly to have an international lifestyle/use case for sending money, rather than let’s say other geographical focuses.
But then again the way I think about it, that is the more obvious place where one would look. It is commonsense telling us that the West Coast and the East Coast are the places to look. That doesn’t mean however that we scope down the entire thing, right, it’s the absolute humility, we don’t profess to know everything as well.
We want to make a start, and where we make a start, it’s where we reasonably justify to ourselves and to our customers that this is why we are doing what we are doing. Then as we deepen that market, if we see there is a need to go to other places, other banks, other use cases, we most certainly will.
Sebastian: Compared to Europe or the UK how has the uptake been, if you talk about TransferWise for Banks has it been easier to basically sell it there to banks, or I would say, I mean, I think what I think I can imagine it would probably be easier in the US because they have much less of an infrastructure than some banks have already. And the other thing is that there are so many banks in the US, so many small banks like the local banks, which they don’t have really here in the Europe.
Murali: Yes, an element of that is true, equally it’s not just the willingness to partner or willingness to, you know, use TransferWise services, it’s equally their ability to do so, there still have to talk to us via tax they still have to find a way to find us, they still have to find a way to surface what we are showing via text tax, and you already pointed out that some of them are running on old infrastructure, so it’s not just the willingness to buy but the ability to integrate. They are two completely different things.
I can’t say that things are easier in the US or things are harder, things are just different from the UK. And again, where we want to optimize is, if we are able to time box an implementation and know for sure that, okay, if I go to an American bank it will take me six weeks, six months and if we do that there is meaningful difference that we make to our customers then we’ll do it.
I think that’s the way to look at things rather than saying it’s probably easier in the UK or easier in the US. Again, UK and Europe particularly, we are sort of lucky in fact, to have regulators who have, enabled us to do, things like, SEPA installment, open to the banking, access to the clearing system and the FBS and the UK for instance.
These are developments that are not yet sort of surface in the US, transparency in the US is literally a law, literally a bank has to show a mid-market rate and their spreads come August next year and it’s not yet addressed in the US. Will it be? Don’t know, but there’s maybe winds of change.
Nas: So Murali, I wanted to know a little bit about the specifics of you guys opening offices in the US so where do you exist, you said a little bit about the kinds of people working in London and Tallinn so just how does that work in the US offices.?
Murali: Yes sure we have a primary office in New York where are developers, bankers, analysts, product folks, they are usually based.
Nas: And when did you set that up?
Murali: The New York office was in 2015 I believe, again, selfishly speaking, TransferWise for bans a lots of it expanding [smiling] shortly but you know that’s the makeup of the New York office. It is smaller than our Tampa office where we have a powerhouse of customer support folks, few product people and also we have operations, guys being based there.
But I think if you look at the split of offices it’s not like an absolute cookie cutter approach, thirteen of these guys don’t talk to the rest of the offices per se, I think we have, I don’t know the relative comparison with other firms but we ask our employees, our wisers to actually travel around the world to our offices, get a feel how we do things, get an understanding of the practices we use in other places and replicate them in our offices.
So we do get together, as a company, the entire company, and get together every year, there’s a whole lot of like, cross sharing, if you will, between teams, a whole lot, and again in the US, it’s a very, very interesting place to be in, and when you start to think about where do you expand, first question is, where should you start then [smiling]
Nas: Cause you mentioned Tampa and I think you are the first company that I’ve spoken to who have an office in Tampa. What was the reason for that?
Murali: I think the state of Florida itself is very welcoming and we’ve been able to source talent there, you know, which is in the right spirit and culture of TransferWise, I think that is one of the most important things for us. It’s not just the typical, usual choice of saying, you know, let’s see our arbitrage of labor cost and then do it, but we actually do it because there is a proper culture of it, because, we’re able to train them better and because we see that scaling is better in those particular offices, which is why I think Tampa works for us.
Nas: So just a second ago you mentioned about get together-s you had a bit of smile, so I’m wondering can you tell a little more about that, also we’re very interested in the different working cultures and kind of, what is like for you working in teams in different places what that look for culture doing business?
Murali: So, we call them Summer Days, in a sense that we get together in Estonia, usually, in a city or town and do something to give back to the community that helped us start off and grow in the first place.
I’ve been to two of those so far, and I can tell you it’s a riot of fun, it’s crazy, like you meet all those people on Slack, on Hangouts, on Zoom, and suddenly you’re able to put names to faces. It’s really cool and there is a level of camaraderie that I have rarely seen in other companies that I have worked in at least, when people come together, it’s, I think that’s shared sense of passion if you will, for lack of better word for what this company is trying to do.
In terms of working with other teams or other cultures, I think we have one culture within TransferWise, which is why I think our hiring process looks specifically to validate the people we hire. Like we should be convinced that you’re likely fitting with us, and we should be convinced that you know, there are things that we would rather avoid and we keep those markers away.
Nas: And what is the TransferWise culture?
Murali: I think it’s a mixture of several things, we sort of write them down as well we have like, no drama, good karma, which essentially is, like, if you have to resolve something just stock it out, we have something called blame as retro so if we screw up something we come up and we say look, we’ve done this, this didn’t work very well and it caused so and so, sort of losses, damage, or whatever we promised not to do it again, but look, here’s the fix that we have deployed, and looking back this is what we should’ve learned and so on.
We’ve got various other values that I’m sure we can talk about it, but, it’s more like, this job is not just it’s a revolution, so it’s like, building that spirit for people to make them feel that they are part of something bigger than the desk that they are tied to.
Sebastian: In a time when a lot of banks in a way, at least European banks we tracked are serving American clients because of fake card and all that, how do you deal with these challenges?
Murali: Regulation is something that we never get around, we always follow the rules. First thing that, you know, when I hear language like this come from prospect bank partners how do you get around this, we immediately sort of correct them, we are not getting around anything today. How do we make this happen? After we tick every box that states, this is what the regulators jurisdiction Y, jurisdiction Z, want us to do.
So we’re not about like, side stepping anything at all. Whether we view regulations as challenges or opportunities, I would lean towards saying we look towards the latter. We manage to change the way regulation happens in Singapore. We said there is no need for people to do face to face verification anymore.
We managed to bring about new law in EU, we are one of the guys who have lobbied for making transparency law and there is still for us for TransferWise which feature the American statue from Belgium and we say stop pissing our money away which is customers telling that to banks, stop doing that, we asked the regulator here in the UK to help us be the first non-bank participant in the faster payment scheme.
We do hold settlement accounts for the Bank of England, and that for someone who’s not even a bank is a phenomenon to step forward. And we do activist stances in many parts in the world, include in Australia where we are part of the royal commission enquiry where they suggested a bit of market practices and so on.
In a way therefore we don’t look at regulation as a static thing, which is blocking business, what we think is it’s evolving, it’s growing developing organism by itself. And we want to be part of it and we want to contribute to it getting better that would help eventually our customers and businesses, to have a better financial life.
Nas: So I wanted to know a little bit about the unique challenges of running an office out in the US what’s different about operating there comparing to your offices here and Tallinn?
Murali: I have no idea, I don’t think there aren’t any [smiling] no look, I mean, it’s another TransferWise office so I think most of the hard work which goes to initially setting the office in terms of having the right kind of culture, having the right kind of hiring culture, having the right kind of behaviors within a company how we typically do this, then allow for the talent that is coming in to turn their own sort of practices then evolve as a whole, I think that hard work has been done in New York and Tampa, and now it is question of sort of maintaining in such that there are still tightly part of the TransferWise family.
Nas: But what about your clients, I understand maybe you got the same company culture but are you in it different ecosystems so to speak?
Murali: Yes, again, when our clients are serviced then they are served by TransferWise, irrespective of whether the person is seating in the US or it’s in Tallinn or Singapore they will be served.
And therefore, having onshore presence obviously helps in having its advantages in certain ways, but the way that we are sort of scaled this particular business, TransferWise for banks, is we minimize the need for human intervention as much as possible. If there is a need we’re obviously equipped in Tampa to handle our US clients, if they need further help, there is people from Tallinn who work different shifts to help them out, and if not anything, then there is Singapore to help, Budapest in Hungary as well.
So, we try to make it as seamless as possible for our clients, it’s not that we find a market for us to open and then try and scale the people locally, we still function as one organism in different places.
Nas: I think what I’m trying to get at is, what are the expectations you have from the American clients, which maybe is different?
Murali: American clients I think, again, you know, it’s the same human need it’s the same product that we are trying to ship to them. What they obviously are bit more careful on, is how do we actually give the undiluted TransferWise experience to customers.
While still dealing and grappling with their existing tax and clearing and so on, so they have in a way, compared to EU clients, extra hurdles to cross.
But that’s what, we have a dedicated product team, we have a PM we have implementation managers we have developers who are very much part of this team and are completely autonomous by themselves. And they prioritize solving for these banks issues as a priority. So if there is a chance for us to optimize and to do this better with the next bank, then we will.
Sebastian: So a lot of our audience are people who run companies, often quite early stage and they are sort of, maybe I engap a move to the US at some point, what would be your tips, any dos and don’ts any words of warning?
Murali: [smiling] Actually, no, I would actually suggest, trying to evaluate and find the product market that even before you going to the market.
The US tends to be, as I said, one country, one market, one product that they asked for, there is a myriad ways in which you can cut that pie.
And having that razor sharped focus helps in your next targets helps in your next acquisition wave, helps in planning your next marketing budget, helps in hiring your next wave of people, unless you have really targeted need of what customer’s needs are and how you are best place to solve it, it does become a bit tough if you do it later down the road.
Again, you know, we are with all the humility learning this as well so I profess we are not in a place that we can preach in the moment, but we can certainly share things and this has been one of them.
Sebastian: In terms of tech, it’s always a great difficulty, I think for many tech companies especially, if you are based in Silicon Valley to hire engineers and everything because you have a lot of competition for these roles, I think for a lot of European companies it’s a big benefit of being in Europe because there is a massive talent pool. Do you find the same so do you do most of the engineering and product development in Europe, or how do you see that in the States?
Murali: We have, again, the way that TransferWise is structured is we have a whole bunch of autonomous tribes and teams who basically solve distinct problems for customers. And that’s how we sort of organize product effort as well.
So when you ask our products for American customers being solved by a talent pool seating not in America, yes, possible we have micro services architecture which is like, you know, we’re trying to build most things in common for our customers. So if there is a great feature that we are building for a customer in Ukraine, we will ask can we do that globally for other customer. If there is no replicability, this can’t be absolutely done by, for every other customer, let’s say, for the Americans, then the US team will step in and say exclude this as part of the feature build. So there is different ways to say which would be part of the SU support and which would be part of the non US support.
Suffice to say, we don’t operate as well as fully independent, we’re cutaway from let’s say the UK team is cut away from MENA team or the Asia team that doesn’t happen at all, we work together most of the time and 90% of the time we build common features, for this small percentage where we do require custom build bespoke we done and future builds to be specified for geo-specific needs, we do have dedicated team to do that. So the US team has to do that, to answer your question [smiling]
Nas: So just to wrap up, what would you say is the biggest challenge of expanding to the US? Something that our listeners can kind of watch out for, trying to get an inspiration from your story?
Murali: I think as you look at the US there are players who are very new, who are very entrenched and established and there’s a whole spectrum in between.
If you choose however to work with newer players then, from what we’ve learned, one of the things to watch out is, the US and Silicon Valley also has a culture of break things and fail fast, which means one of your clients may break things and may fail fast.
It is important to keep that in consideration as you plan your next expansion, your clients and how you do your targeting so that you choose the players who don’t fail that often.
Nas: But does that also give you room to be able to experiment or try out new things as well?
Murali: Yeah, the question is that every experimentation comes with the investment of time and effort, that’s none zero from our end.
The question then to ask is would this investment of time will be better placed, in serving real customers, real problems in a more established sense, where we know and have established that it is a problem we can solve there is a bank that we can work with and there is a timeline that we can work towards.
The certainty of it is always alternative to saying, shall we risk more and go after several small players, it’s always a balance that we take.
This is Move Your Business to the United States from Mount Bonnell Advisors. I’m Nastaran Tavakoli-Far and you’ve just heard from TransferWise’s Murali Akella. Our sound engineer is Emmett Glynn and our podcast manager is Nevena Paunovic. We also use some samples from the Prelinger Archives who have some really good historical material from America, we’ll be back in two weeks, in the meantime send us your questions to info@mtbonnell.com we’ve also put that in the show notes. Okay, speak to you soon.
Listen to the full Episode 27: Murali Akella of TransferWise – Not a Job, But A Revolution
